Page 20 - Krugmans Economics for AP Text Book_Neat

Contents

Module 55 Firm Costs 548 The Short-Run Production Decision 592
From the Production Function to Cost Curves 548 The Shut-Down Price 593
Two Key Concepts: Marginal Cost and Average Cost 550 Changing Fixed Cost 595
Marginal Cost 550 Summing Up: The Perfectly Competitive Firm’s
Profitability and Production Conditions 595
Average Cost 552
FYI: Prices Are Up . . . but So Are Costs 596
Minimum Average Total Cost 555
Module 59 AP Review 597
Does the Marginal Cost Curve Always Slope Upward? 556
Module 55 AP Review 557
Module 60 Long-Run Outcomes in Perfect
Competition 599
Module 56 Long-Run Costs and Economies
of Scale 559 The Industry Supply Curve 599
The Short-Run Industry Supply Curve 599
Short-Run versus Long-Run Costs 559
The Long-Run Industry Supply Curve 601
Returns to Scale 562
The Cost of Production and Efficiency in Long-Run
Sunk Costs 563
FYI: There’s No Business Like Snow Business 564 Equilibrium 605
FYI: A Crushing Reversal 605
Summing Up Costs: The Short and Long of It 564
Module 60 AP Review 606
Module 56 AP Review 565

Module 57 Introduction to Market Structure 567 Module 61 Introduction to Monopoly 608
The Monopolist’s Demand Curve and Marginal Revenue 608
Types of Market Structure 567
The Monopolist’s Profit-Maximizing Output and Price 612
Perfect Competition 568
Monopoly versus Perfect Competition 613
Two Necessary Conditions for Perfect Competition 569
FYI: Monopoly Behavior and the Price Elasticity
FYI: What’s a Standardized Product? 570
of Demand 614
Free Entry and Exit 570
Monopoly: The General Picture 614
Monopoly 570
Module 61 AP Review 615
Defining Monopoly 571
Why Do Monopolies Exist? 571
Module 62 Monopoly and Public Policy 617
Oligopoly 573
Welfare Effect of Monopoly 617
Is It an Oligopoly or Not? 573
Preventing Monopoly Power 618
Monopolistic Competition 574
Dealing with a Natural Monopoly 619
Module 57 AP Review 576
Public Ownership 619
Section 10 Review 577
Regulation 619
Must Monopoly Be Controlled? 621
Section 11
FYI: Cable Dilemmas 621
Market Structures: Perfect Competition
and Monopoly 583 Module 62 AP Review 621

Module 63 Price Discrimination 624
Module 58 Introduction to Perfect Competition 584
Price Discrimination Defined 624
Production and Profits 584
The Logic of Price Discrimination 624
When Is Production Profitable? 586
Price Discrimination and Elasticity 626
Module 58 AP Review 588
Perfect Price Discrimination 627
Module 63 AP Review 629
Module 59 Graphing Perfect Competition 590
Section 11 Review 630
Interpreting Perfect Competition Graphs 590

xviii CONTENTS